If you are considering becoming a landlord, you probably already know that it will require some hard work if you want your property to remain financially secure. The good news is that you don’t have to assume all of the risk on your own. Landlord insurance may be the safety net you need in order to enter, or remain in the property market without endangering your financial security in the process.
But before you sign on the dotted line, there are four things you should know about landlord insurance.
- Choose the right cover for your property
Landlord property insurance has no shortage of options. But the best way to narrow down the myriad of choices you’ll be faced with is to think about your property’s specific requirements, and what level of cover can provide you with what you need.
If your property is near a body of water, it only makes sense to take out a policy that includes flood insurance. Likewise, if it is located in or even near a bushfire prone zone, you should make sure your insurance includes the appropriate cover for bushfire damage. It’s easy to brush off these worst case scenarios, but the investment is well worth the peace of mind. At the end of the day, it’s always better to pay a little extra in premiums now than to be left out of pocket when you need help the most.
- Read the fine print carefully
No matter who you take out your policy with, there will always be some exclusions. Before signing up for a specific policy, make a point of finding out what it doesn’t cover, as well as what it does. Read the Product Disclosure Statement carefully; if you think there could be any chance that the exclusions are not in your best interests, then it’s time to consider a different option.
- Compare landlord insurance quotes
Not only are there plenty of options for landlord insurance, premiums and extras, but the quote you receive will also vary extensively. It’s always advisable to compare several different landlord insurance quotes to ensure that you get the best possible deal.
It’s also important to remember that extremely cheap policies are often cheap for a reason. Lower premiums can be tempting, but they simply don’t pay off in the long term. The trick is to find the right balance between a policy that is optimal for your financial situation and insurance needs.
- Don’t forget about your tenants
A good policy will cover damages caused by natural disasters, but a great policy will take your cover even further. A comprehensive landlord insurance policy will cover your property for any damage caused by your tenants or their guests. This means that if a can of paint is spilled all over the carpet in a DIY project gone wrong, your insurance will cover the damage.
A quality landlord insurance policy will also cover you in the event that your tenants stop paying rent suddenly, no matter what the reason. So your rental income will not be affected if your tenants run into any unexpected circumstances. This provision usually kicks in after approximately a month, so if you want to be completely covered, ask your tenants to pay one month’s rent as a security deposit.
Landlord insurance is a smart investment in the financial security of some of your most valuable assets – your investment properties. Remember to consider these four points before signing up for a policy, and you’ll be in a much better stead to choose the right landlord insurance for your needs.